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Organizational Structure Dimensions

Disciplines > Change Management > Organization Design > Organizational Structure Dimensions

Specialization | Standardization | Formalization | Centralization | Configuration | Traditionalism | See also

Here are a number of dimensions or attributes that should be considered when designing an organization. These are important also during strategic planning.

Specialization

The shape of a company is often closely related to the number and distribution of specialist roles. 'Birds of a feather flock together', as they say, and people who have studied the same subject like to work with one another, as not only can they discuss common problems but they also can learn from one another as they professionally develop. Whilst not always necessary, it can also be helpful if your manager understands you and your work.

In consequence, when companies split into departments, these are often driven by specialization, and firms which have more specializations will have more divisions (and possibly sub-divisions too).

Standardization

The number and control of repeatable processes varies with organization. In the classic manufacturing assembly plant there is much which is standardized. On the other hand, professional organizations such as consultancies will have less control, and organizations that that work flexibility will have less standardization.

Formalization

Formalization of what is done is similar to standardization but is more about the number of written rules, policies, procedures, and so on. This is typical of a large bureaucracy where there is a large central staff whose existence is often based on the formulation and policing of rules. It also may be found in highly regulated environments and where health and safety is at risk, including hospitals and nuclear power stations.

The dilemma with formalization is that whilst it ensures consistency and can help the organization stay legal and safe, it also prohibits originality and change, with the result that formalized organizations can become unthinking and out of date.

Centralization

In a centralized organization, much of the control is held centrally, with managers and corporate staff who issue rules and make key decisions.

Whilst centralization gives control that allows for common and and lockstep action, it removes freedom from the extremes of the company where local conditions and customers may demand alternative courses of action.

Repeated centralization and decentralization is a pattern found in phases of organizational growth and crisis, where each reacts against problems in the other.

Configuration

The configuration of a company is in the number of hierarchical layers and span of control (how many subordinates each manager has).

The natural approach to sustaining control in a company is to have managers and subordinates but too many subordinates are difficult to manage, so this process continues in subdivision. This however creates its own problems and various organizational forms have been used in order address the issues of configuration.

Traditionalism

In the original organizations which were typically craft-based, such as thatching, agriculture and stonemasonry, there were few written rules and many people could not read or write. Instruction and learning was done through a master-apprentice structure.

Whilst there are fewer such organizations now, a significant variable is the amount of information and processes which are documented as opposed to being orally transmitted. Smaller companies are more likely to retain this informality, especially where they are based on expertise and where they are sufficiently stable that employees stay there long enough to learn tacitly and then go on to re-transmit their knowledge.

See also

Motivation, Power, Phases of Organizational Growth and Crisis